TSS #060: How to Price Your Offer (for max impact)Feb 25, 2023
Read time: 3 minutes
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As a solopreneur, I’ve offered various types of consulting and coaching calls over the last few years. And I’ve built some online courses.
One of the biggest challenges has been getting my pricing right.
Pricing services and digital products are tricky.
I wish I had a secret pricing formula to share with you.
Spoiler: There isn’t one.
But it’s really important to get this right because pricing is a critical component of any offer. It’s all about getting the right thing in front of the right people at the right price.
I’ve definitely made some pricing mistakes along my journey. But they turned out to be valuable lessons. So today I’ll tell you how I think about pricing my offerings.
And maybe my lessons can help you find the right price for your services and digital products.
Here are 4 things I consider when pricing a service or a digital product:
Value of the Outcome
What are the specific outcomes and benefits your customer will receive from your offer?
How does your offer compare to others in the market in terms of helping your customer achieve the intended outcome?
The more valuable the outcome, the more you can charge for it.
Does the outcome mean $1K for your customer?
You want to get real specific about who your target customer is, and more importantly - where they are in their journey.
For example, I sell a course called The LinkedIn Operating System that helps people build a LinkedIn audience to grow a business (as opposed to just getting followers).
After doing some research, I found that most of my target customers were at the beginning or intermediate stages of using LinkedIn to generate business.
That suggested to me that my product should be offered at a lower price point. Putting a high-ticket product in front of this target customer just didn’t make sense.
Now, if my research had suggested my target customers had 100K+ followers and six-figure or 7-figure businesses, that would have supported a higher-cost product. But that was not the case, and I priced accordingly.
Scope out the prices of similar offerings, and see how yours stacks up in terms of content and value.
You want to be sure you’re not undercutting yourself by pricing too low. If your price is too cheap, your target customers may perceive a low value.
But you also don’t want to price yourself out of the market.
It’s definitely a delicate balance.
My theory has always been that by coming in at a lower cost with a higher-value offering, I could capitalize on word-of-mouth (referral) marketing. And this has worked out pretty well for me so far.
So I never try to charge the most I possibly can. I aim to charge a very reasonable price compared to what else is out there that could also help my target customers.
The beauty of online service offerings and digital products is you can always adjust your pricing based on demand, feedback, and other things you learn from your customers.
So don’t be afraid to just start with a price that you feel comfortable with, and then adjust as you learn.
Here’s how I came to my $150 price point for my LinkedIn courses:
- Hypothesis 1: Most people are beginners or intermediate. Pricing should skew low. Less than $300.
- Hypothesis 2: Pricing should be low enough to be a quasi-impulse buy, but high enough to earn significant revenue. To make it a quasi-impulse buy, it probably needs to be less than $200.
- Hypothesis 3: Word-of-mouth and affiliate sales would only make sense at a lower price point. Noting hypothesis 1, the majority of customers won’t feel comfortable referring friends to something that’s too expensive. Let’s get that first number in the “1’s”. Drop to $150.
- Hypothesis 4: Word-of-mouth will accelerate with global adoption. Make sure to include PPP (purchase power parity) to incentivize purchases from other countries. Include 20% to 60% discounts by country.
I’ve been selling The LinkedIn Operating System for 18 months now. And I’ve enrolled over 11,500 customers in the course.
One of the most common pieces of feedback I get about my course is how incredibly cheap it is for the value delivered. God, I love to hear that. It’s a win/win for me and my customers.
And the icing on the cake?
When customers feel they’ve received a ton of value at a reasonable price, they’re much more likely to spend money with you again.
And that lets you broaden your offering, or decide that you want to build a high-ticket product or service in the future.
Well, that’s all for today.
See you next Saturday.
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